The Federal Reserve is “strongly committed” to bringing down inflation that is running at a 40-year high and policymakers are acting “expeditiously to do so,” U.S. central bank chief Jerome Powell said on Wednesday. “It is essential that we bring inflation down if we are to have a sustained period of strong labour market conditions that benefit all,” Powell said at a hearing before the U.S. Senate Banking Committee, adding that the central bank in coming months will be looking for “compelling evidence” of easing price pressures. Inflation continues to run well above the Fed’s targeted level of 2pc. A gauge of price increases that excludes volatile food and energy costs may have flattened out or eased somewhat last month, Powell testified, but Russia’s Ukraine invasion and COVID-19 lockdowns in China are putting continued upward pressure on inflation. One week ago, the Fed raised its benchmark overnight interest rate by three-quarters of a percentage point – its biggest hike since 1994 – to a range of 1.50pc to 1.75pc, and signalled rates would rise another 1.75 percentage points this year. That steep rate hike path, designed to slow the economy, has sparked widespread concern about a recession and a weakening of labour markets. To the Senate committee on Wednesday, Powell pledged an “overarching focus” on bringing down inflation and reiterated that ongoing increases in the Fed’s policy rate would be appropriate, with the exact pace dependent on the economic outlook. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store,” he said, adding that policymakers would need to be “nimble” in response to the incoming data. “The American economy is very strong and well positioned to handle tighter monetary policy,” he said. Powell’s remarks to the committee also showed just how much the inflation environment have changed in the three months since he delivered the first of his semi-annual reports to lawmakers. At that time, he described inflation – which was running at 6pc a year by the Fed’s preferred measure – as “likely to decline over the course of the year.” Little sign of that has emerged since those remarks, despite 150 basis points of rate hikes so far this year and more to come. In an indication of how inflation has emerged as a thorny political issue that threatens to tip the balance of power in Congress to Republicans in elections this November, Powell found himself under fire from both the left and right. Senator Elizabeth Warren, a Democrat representing Massachusetts, for one, took the Fed to task for pushing through rate hikes that raised the risk of a recession that could put millions out of work. In one of the more heated criticisms of the Fed’s response to inflation, Republican Senator John Kennedy of Louisiana said inflation was hitting his constituents “so hard they are coughing up bones.” Republican Senator Thom Tillis of North Carolina, meanwhile, chided Powell for not lifting rates sooner even though a number of well-known monetary policy rules would have triggered such a move had the Fed followed them. The Fed has never used policy rules “in a big way,” Powell answered, adding that the central bank’s policy rate is likely by the end of this year to be near the level prescribed by one of the more popular ones – the Taylor Rule. The median projection among Fed policymakers released last week showed they expect the target rate to rise to 3.4pc by the end of the year. Prices of fed funds futures contracts have fully priced in a 75-basis-point rate hike at the central bank’s July policy meeting and around even odds of a policy rate in the 3.50pc-3.75pc range at the end of 2022. Fed officials’ latest projections see economic growth slowing to below trend this year while the U.S. unemployment rate – currently 3.6pc – starts to tick higher. Meanwhile, they have materially tempered their expectation for how quickly inflation will subside, with a median forecast for a year-end annual rate easing to 5.2pc by their preferred measure from 6.3pc as of April. In March, they had put that figure at 4.3pc. Powell’s remarks to the Senate committee kicked off the first of two days of semi-annual congressional appearances to update U.S. lawmakers on the state of the economy and monetary policy; he will testify before the U.S. House of Representatives Financial Services Committee on Thursday.